Credit scores represent a statistical analysis of a person’s credit files, telling others how likely that person is to pay their bills. In other words, how “creditworthy” are they? Do they pay their bills in full and on time… or not? Credit scores are typically obtained from major credit bureaus such as Experian, Equifax and TransUnion. When applying for a mortgage, it’s best to have a credit score that is in the 700-850 range, which tells the mortgage lender they won’t have to worry about you paying them back as intended.
What are some ways you can improve your credit score before applying for a mortgage? For starters, spend less in the months leading up to the time when you plan to apply for a mortgage. The more you pay down your balances, keep balances low, and/or eliminate credit card balances, the better your score will be. If you have several cards, pay off the ones with small balances and concentrate on using just one or two select cards for “everything.” This helps streamline your credit report.
It’s also a great idea to pay bills on time. While this may prove a challenge for some, ultimately it’s very important toward improving one’s credit score.
You don’t want to miss any payments and you don’t want to do anything too out of the ordinary, either, that would indicate to potential lenders that you’d fall in their “risk” category. For instance, if you’re thinking of buying an expensive brand new car on credit before you apply for a mortgage for a house, wait a while instead, ideally until after the mortgage gets approved and is moving forward.
Improving your credit score takes some discipline and diligence. It’s something you have to commit to and “stick with” over the long haul, so that you can prove to mortgage lenders that you’re a responsible person who pays his or her debts properly.
Mortgage Man is a private lending firm providing short-term financing solutions to real estate investors. Based in Louisville and in business since 2005, Mortgage Man helps qualified people with their real estate investments. Call 502-400-3011 or email email@example.com for more information.